Cross Object formula(Cross Object reference) or Spanning Relationship

In the regular formula field we can use the fields from parent object. We can not reference fields from child object.

formulas that span two related objects and reference merge fields on those objects. 

can reference merge fields from a master ("parent") object if an object is on the detail side of a master-detail relationship

can reference fields from objects that are up to 10 relationships away

If you create a formula that references a field on another object and display that formula in your page layout, users can see the field on the object even if they don't have access to that object record

example:

I created a re-usable score component where a scoreboard object references over object. I used the ballnumber field in the score formula.

Upon creating a new formula (in a formula field, field update or validation rule), you might get an error similar to the following:

You have reached the maximum number of 15 object references on ObjectName

based on the number of lookup fields used in the formulas or validation rules or Workflow rules, spanning relationships are counted.

example: if an object has 4 lookup fields and only 3 lookups are used in a rule, then it is said that the object has 3 spanning relationships.

these are the places where we can coome accross spanning relationships issue

formula fields

workflow rules and field update actions

approval processes

validation rules

assignment rules

escalation rules

auto-response rules